The freeze is effective immediately, a senior administration official said in a briefing for reporters on Monday. The official said that the U.S.’s actions are in conjunction and cooperation with the European Union, Japan, the UK, Canada, and others. This means that not only will Russia not be able to access funds in U.S. dollars, they will be unable to use dollars in the other countries turn to other banks and other currencies.
By making the move effective immediately, before markets open, the official said, Russia will be unable to move assets to avoid or mitigate the consequences.
“Our strategy,” the official said, “is to make sure that the Russian economy goes backward as long as President Putin decides to go forward with his campaign.”
Russian President Vladimir Putin held a meeting with economic advisers on the global sanctions hammering his country, calling the West an “empire of lies.” Among those present at the Kremlin meeting was Russian Central Bank Governor Elvira Nabiullina, First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister Alexander Novak and Finance Minister Anton Siluanov.
Russian President Vladimir Putin chairs a meeting on economic issues at the Kremlin in Moscow on Feb. 28, 2022. (ALEXEY NIKOLSKY/SPUTNIK/AFP via Getty Images / Getty Images)
The intended effect, the official added, is to cripple the Russian economy and use up the country’s “rainy day fund” as their currency, the ruble, plummets in value. That rainy day fund was built up to defend against economic consequences when Russia invaded Crimea in 2014.
According to the Treasury Department’s Office of Foreign Assets Control (OFAC), this is not a complete and total block of the central bank, as OFAC is authorizing certain transactions with Russia’s central bank that are “energy-related,” and that additional authorizations could follow if necessary.
Russian Presidential Aide Maxim Oreshkin (R) and Russian Central Bank Governor Elvira Nabiullina attend a meeting on economic issues held by Russia’s President Vladimir Putin at the Moscow Kremlin, Feb. 28, 2022. (Alexei NikolskyTASS via Getty Images / Getty Images)
The Treasury Department also announced that they are blocking the Russian Direct Investment Fund, its management company and one of the company’s subsidiaries, which will block “yet another route through which Russia has benefited from access to the U.S. financial system.”
The Treasure Department also said they are sanctioning Russian Direct Investment Fund CEO Kirill Dmitriev, a close ally of Putin who has served as a representative for him to American institutions.
Russian Direct Investment Fund CEO Kirill Dmitriev is seen at the Russian Presidential Academy of National Economy and Public Administration, Jan. 13, 2022. (Sergei FadeichevTASS via Getty Images / Getty Images)
“The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities, and target the funds Putin and his inner circle depend on to enable his invasion of Ukraine,” Treasury Secretary Janet Yellen said in a statement. “Today, in coordination with partners and allies, we are following through on key commitments to restrict Russia’s access to these valuable resources.”
The U.S. and allies are also poised to block certain Russian financial institutions from the SWIFT international financial system, effectively cutting them off from the world.
The senior administration official said Monday morning that the list of Russian banks to be cut off from SWIFT will be finalized by the European Union, as SWIFT falls under the authority of Belgium.